Trump 2.0: The First 100 Days | United States

Stagflation is Now Our Base Case for 2025

Impact on CRE

• A good rule of thumb for understanding how the tariffs affect the economy: for every one percentage point increase in the effective tariff rate, real GDP growth drops by 7 bps and the CPI increases by 10 bps. • The main hits to GDP come from higher prices which results in consumers buying less, tighter margins at importing firms, and • The hit to inflation comes from higher import prices and higher input costs, some of which get passed on to consumers. • The end result is near-term stagflation, meaning weaker economic growth and higher inflation. • What does this mean for CRE? Weaker growth = weaker demand for space. Higher inflation = complicated decisions for the Fed. tighter financial conditions related to recession risks and uncertainty effects.

Stag…

…flation

3.5

4

3.0

3.5

2.5

3

2.0

2.5

1.5

2

1.0

1.5

0.5

1

0.0

0.5

-0.5

0

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

2024Q1

2024Q2

2024Q3

2024Q4

2025Q1

2025Q2

2025Q3

2025Q4

Real GDP, AR%

PCE, Y/Y %

Source: Cushman & Wakefield Research, Moody’s Analytics

CONTENTS

CONTENTS

Cushman & Wakefield

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